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Full text of "ANNUAL REPORT - ONTARIO ENERGY BOARD 1999-2000"

Annual Report 




Ontario 





Willi 

200u 



n t a 



rio Energy Board 



Ministry of 


Ministore de 


Energy, Science 


I'Energie, des Sciences 


and Technology 


et de la Technologie 


Office of the 


Bureau du 


Minister 


ministre 


Hearst Block 


Edifice Hearst 


900 Bay Street 


900, rue Bay 


Toronto ON M7A 2E1 


Toronto ON M7A2E1 


Tel. (416) 327-6715 


Telephone (416)327-6715 


Fax (416) 327-6754 


Telecopieur (416) 327-6754 




Ontario 



The Honourable Hilary M. Weston 

Lieutenant Governor of the Province of Ontario 



I hereby submit the annual report of the Ontario Energy Board. It reviews the events and 
activities of the fiscal year ending March 31, 2000. 

Respectfully submitted, 







fim Wilson 

Minister of Energy, Science and Technology 



QNTAHIO ENERGY BOARD 

TABLE OF CONTENTS 

1 . Message from the Chair 2 

2. Board Members in 1999-2000 5 

3. Overview of the Board's Responsibilities 8 

Legislative Mandate 8 

Natural Gas 9 

Electricity 13 

4. Organizational Overview of the Board 16 

5. The Year in Review: Operational Highlights of Fiscal 1999-2000 20 

6. Financial Report 25 

7. Key Board Contacts 28 



The Ontario Energy Board is located at: 

2300Yonge Street, Suite 2601 

Toronto, Ontario M4P 1E4 

Telephone: (416) 481-1967 or 

Toll Free in Canada: 1-888-OEBOARD (632-6273) 

Fax: (416) 440-7656 



Web site located at http://www.oeb.gov.on.ca 

Copies of the Annual Report in English and in French, as well as other OEB publications, 
may be obtained through the Board. 

Photos courtesy of Hydro One Networks andTransCanada PipeLines 



Printed in Canada on Beckett Expression, Alabaster (cover) and Iceberg (inside). 
ISSN 0317-4891 



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Message from the Chair 



Many of the Board's 

activities in fiscal 

1999-2000 

involved developing 

an effective 

regulatory 

framework for 

the new, 

competitive 

electricity market. 



Fiscal 1999-2000 was a year 
of challenge and change for 
Ontario's natural gas and 
electricity sectors. It was also 
an incredibly busy year for 
the members and staff of the 
Ontario Energy Board (OEB). 

In 1998, the government 
provided a blueprint for the 
transition to open competition 
in Ontario's electricity sector, 
with the passage of the Energy 
Competition Act, 1998 (ECA). 
The legislation also continued 
the deregulation process in 
natural gas, which got under 
way in 1985. 

The ECA is intended to usher 
in a new era in electricity in 
Ontario, and many of the 
Board's activities in fiscal 
1999-2000 involved developing 
an effective regulatory frame- 
work for the new, competitive 
electricity market. 

During 1999-2000, for example, 
the Board issued transitional 
licences and rate orders 
to electricity distribution 
utilities. Transitional licences 
were issued to Ontario Hydro 
Networks Company and the 
Independent Electricity Market 
Operator. Transitional licences 
were also issued to the 
province's existing electricity 



generators, including Ontario Power 
Generation Inc., and the process of licensing 
electricity retailers was begun. 

The Board finalized the Rate Handbook 
and the Accounting Procedures Handbook for 
electricity distribution utilities during the past 
fiscal year, and finalized several codes, including 
the Retail Settlement Code, the Standard Supply 
Service Code, the Affiliate Relationships Code 
and the Electricity Retailer Code of Conduct. 

In addition, the Board prepared guidelines 
for the filing of applications for mergers, 
acquisitions, amalgamations and divestitures 
of electricity transmission and distribution 
systems. Substantial progress was also 
made on developing the Distribution and 
Transmission System Codes. 

In the natural gas area, the Board held a 
number of hearings to deal with rates, franchises, 
facilities approvals and storage facilities. Several 
natural gas marketers were also licensed during 
the year, and significant progress was made on 
the development of a Distributor Access Rule for 
gas utilities. In addition, the Board finalized the 
Affiliate Relationships Code for gas utilities. 

Fiscal 1999-2000 marked the Board's first-ever 
approval of a Performance Based Rate (PBR) 
application. The approval was granted for a 
targeted Operations and Maintenance PBR plan 
by Enbridge Consumers Gas. The Board also 
began a detailed review of its Model Franchise 
Agreement for natural gas, during the year, 
partly in anticipation of potential impacts 
from municipal government restructuring. 



The Board's consumer protection role 
remained an important focus over the past 
fiscal year, and staff participated actively in 
the development of new consumer education 
materials on electricity restructuring. Frequent 
updates were also made to the Board's Web 
site, to ensure that the public and stakeholders 
had access to up-to-date information on devel- 
opments in gas and electricity, as well as 
details on the Board's activities. 

Recognizing that the OEB's Web site is an 
increasingly important source of information 
to energy users and stakeholders, the Board 
decided in 1999-2000 to redesign the site. Work 
proceeded on the project throughout the year, 
with the official launch of the enhanced site 
scheduled to take place early in fiscal 2000-2001. 

In March 2000, the OEB launched its new 
Customer Service Centre, to provide consumers 
with general information, and answer specific 
questions on gas and electricity. The Board also 
established a complaints handling mechanism 
during fiscal 1999-2000, to deal with consumer 
complaints about energy marketing. 



regulatory environment 
required an uncommon 
amount of hard work by 
Board members and staff as 
well as by our many stake- 
holders in the energy industry. 
Fortunately, we all can look 
back on a year of solid 
achievement, and take some 
encouragement in the know- 
ledge that our hard work was 
worthwhile. 

A great deal still remains 
to be done, however, as we 
move closer to the opening of 
Ontario's competitive electricity 
market. Early in the coming 
fiscal year, for example, the 
Board will need to do more 
work in the area of rates, as 
more than 250 electricity 
utilities across Ontario file 
their first-ever unbundled 
rate applications with the 
OEB for approval. 



The Board's Year 2000 (Y2K) readiness program 
was a top priority of the organization during 
the year. The scope of the program included all 
necessary remediation of computer-dependent 
systems, contingency planning and close 
cooperation with external suppliers, building 
management and other stakeholders. The 
analysis, remediation, testing andY2K readi- 
ness certification of all operating systems was 
successfully completed by year-end 1999 and 
the Board experienced noY2K related problems. 

My Board colleagues and I are fortunate to 
be at the forefront of a major transformation 
of Ontario's energy sector. During the year, 
however, the many challenges of the changing 



Before those rate decisions 
can be made, the Board must 
determine the initial electricity 
transmission tariff. In addition, 
the Board must finalize all 
outstanding codes. Ontario's 
electricity industry must then 
implement the new require- 
ments before the new market 
opens. During the coming 
year, the Board will also be 
dealing with the province's 
natural gas utilities on applica- 
tions that involve PBR plans 
and the unbundling of services. 



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Board members 

and staff 

gave generously 

of their time 

and provided 

information and 

training on regulatory 

developments to 

a broad range 

of audiences. 



The tight timetable for Ontario's 
move to electricity competition 
required the Board's staff to 
work closely with major 
stakeholders in the province's 
energy sector. In this regard, I 
cannot say enough about the 
tremendous contribution by 
the Board's members and staff 
in ensuring a smooth transition 
to electricity competition in 
Ontario. Their unflagging 
enthusiasm, total commitment 
and unfailing willingness to 
assume new roles and take 
on new challenges deeply 
impressed and frequently 
inspired me throughout the 
year. 

In addition to carrying a 
heavier-than-usual workload 
over the past 12 months, the 
Board's members and staff 
also made a significant con- 
tribution to the stakeholders' 
understanding of electricity 
and gas issues. In workshops, 
presentations and speaking 
engagements throughout the 
province, members and staff 
gave generously of their time 
and provided information and 
training on regulatory develop- 
ments to a broad range of 
audiences. 



On behalf of my Board colleagues, I would 
also like to express our collective appreciation 
to the many stakeholders and partners who 
made such a valuable contribution to our work 
over the past fiscal year. Their experience and 
expertise - provided in working groups, task 
forces and other forums - was a vital resource 
in the Board's development of the various 
licences, codes, guidelines, handbooks, policies 
and procedures needed in the new, competitive 
environment. 

With the government's goal of a competitive 
electricity market, the Ontario Energy Board 
will face a number of new challenges in 
the coming fiscal year. With the continuing 
enthusiasm of the Board's members and staff, 
and the continued cooperation and assistance 
of our valued partners and stakeholders, I am 
confident that we will achieve our objectives. 

Floyd Laughren 
Chair 






BOARD MEMBERS IN 1 999-2000 



Floyd Laughren, Chair 

Floyd Laughren was appointed Chair of 
the Ontario Energy Board in March 1998, 
after a 27-year career in provincial politics 
as the MPP for Nickel Belt. At the time of his 
retirement, Mr. Laughren, who was first elected 
in 1971, was the longest-serving member of 
the Legislative Assembly of Ontario. His 
many achievements included serving as 
Deputy Premier and Minister of Finance in 
the government of Premier Bob Rae, with 
responsibility for the former ministries of 
Treasury and Economics, Revenue and Financial 
Institutions. Mr. Laughren also chaired the Policy 
and Priorities Board of Cabinet, and the 
Treasury Board, and sat on the Cabinet 
Subcommittee on Industrial Assistance. 

Before his election in 1971, Mr. Laughren 
taught economics at Cambrian College of 
Applied Arts andTechnology in Sudbury, and 
worked in the retail sector in western Canada. 
He holds a diploma in business from Ryerson 
Polytechnic University, and a Bachelor of Arts 
in economics from York University. 



George Dominy, Vice-Chair 

George Dominy was appointed Vice-Chair 
of the OEB in June 1993. Mr. Dominy has 
extensive experience in the energy field, in 
both the private and public sectors. Before 
joining the Board, he served as Director of 
the Electricity, Oil and Gas Branch at the former 
Ministry of Energy. Mr. Dominy holds a 
Master's degree in mathematics from 
Cambridge University. 



FULL-TIME 
BOARD MEMBERS 

Paul Vlahos was appointed 
as a full-time member of the 
Board in October 1994. Before 
his appointment, Mr. Vlahos 
held positions in the natural 
gas industry and staff positions 
at the OEB. He also served as 
General Manager at the Ontario 
Telephone Service Commission. 
Mr. Vlahos taught economics 
at the University of New 
Brunswick, and holds a 
Master's degree in economics. 

Dr. Roger M. R. Higgin was 

appointed as a full-time 
member of the Board in 
September 1996. Before joining 
the Board, he was General 
Manager and Chief Operating 
Officer of Unisearch Associates, 
Inc. Dr. Higgin held a number 
of senior positions in the former 
Ministry of Energy, including 
that of Assistant Deputy 
Minister - Programs and 
Technology Division, and pre- 
viously served as a member of 
the Board from 1988 to 1991. 
He holds a Ph.D. in chemical 
engineering as well as a Master 
of Business Administration. 



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Sheila Halladay, a lawyer, 
was first appointed to the Board 
as a part-time member on 
December 2,1998. Ms. Halladay 
was appointed as a full-time 
member of the Board on April 
21, 1999. Before her appoint- 
ment, she was a corporate/ 
commercial partner in a major 
law firm. Ms. Halladay holds 
B.A., B.Sc, and LL.B. degrees 
from the University of 
Windsor, and an LL.M. degree 
from Columbia University. 

Dr. Malcolm Jackson was 

appointed to the Board in 
March 2000. For the past 
decade, he managed a con- 
sulting practice in economics 
and finance that specialized in 
energy and public utility mat- 
ters. He has also served as 
director of several privately 
held corporations. He previously 
served as a member of the 
Board from 1986 to 1989, 
after having held senior 
positions in oil and gas 
production and oil pipeline 
companies. Dr. Jackson holds 
degrees in science (M.Sc. and 
Ph.D.) and business (M.B.A.). 



PART-TIME BOARD MEMBERS 

Judith Simon, an environmental scientist, 
was appointed as a part-time member of 
the Board in May 1992. She previously held 
managerial positions with the Ministry of 
Industry, Trade andTechnology and the 
Ministry of the Environment, and was also 
an energy planner with the former Ministry 
of Energy. Ms. Simon is currently a consultant 
who specializes in environmental assessment 
and strategic planning. 

F.Anne Drozd was appointed a part-time 
Board Member in April 1993. She is a Fellow 
of the Institute of Chartered Accountants of 
Ontario, and President of ACHOS, a management 
consulting firm. Ms. Drozd has practiced as a 
Certified Management Consultant since 1982, 
and has extensive regulatory experience. 

Dr. Sally F. Zerker was appointed as a part-time 
member of the Board in June 1997. She holds 
a Ph.D. in economics from the University of 
Toronto, and has been a professor at York 
University since 1970. Dr. Zerker has lectured 
and published numerous books and articles 
on Canadian economic history and political 
economy, as well as on the international 
oil industry. 

Arthur Birchenough, REng., was appointed 
as a part-time member of the Board on 
February 3, 1999. He is a professional engineer 
with 35 years' experience in the engineering/ 
construction industry, having held senior executive 
positions at AGRA Monenco and Canatom Inc. 
Mr. Birchenough currently serves as a senior 
advisor at Sheridan College. 



Cathy Spoel was appointed to the Board as a 
part-time member on October 13, 1999. She is 
a lawyer with 15 years experience in adminis- 
trative law, with a focus on land use planning, 
environmental, municipal and energy law. 
Ms. Spoel has an honours degree in Mathematics 
and a Master of Law degree in Alternative 
Dispute Resolution. She was called to the 
Ontario Bar in 1983. 

Brock Smith joined the Board as a part-time 
member in October 1999. Prior to his retirement 
from the Ontario Civil Service in 1993, he served 
as Deputy Minister in a number of ministries, 
includingTreasury, Economics, Environment 
and Northern Development and Mines. He is 
currently a public affairs consultant. Mr. Smith 
holds a Master's degree in Political Science 
and a Bachelor of Commerce degree. 



DEPARTING BOARD MEMBER 

H. Gail Morrison, a lawyer, was first appointed 
as a full-time member of the Board in 1996. 
Before her appointment, Ms. Morrison had 
worked in the Ontario public service since 
1982, holding positions with the Ombudsman's 
Office and the Environmental Assessment Board. 
The Board's chair, members and staff would 
like to take this opportunity to thank 
Ms. Morrison for her outstanding service 
and dedication during her years at the OEB. 



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OVERVIEW OF THE BOARD'S RESPONSIBILITIES 



LEGISLATIVE 
MANDATE 

As a regulatory agency of the 
Ontario government, the OEB 
is an independent, quasi-judicial 
tribunal created by the Ontario 
Energy Board Act (the OEB Act). 
Although the Board reports 
to the provincial legislature 
through the Minister of Energy, 
Science and Technology, it is 
independent of the ministry, and 
all other provincial agencies, 
in discharging its regulatory 
functions and responsibilities. 



In 1998, the passage of the Energy Competition 
Act, 1998 (the ECA) gave the Board increased 
powers and a broader mandate, including 
responsibility for regulating the monopoly 
transmission and distribution systems 
for electricity. 

The Board's regulatory role and responsibilities 
are described in several provincial statutes. 
The legislation includes the Energy Competition 
Act, 1998, the Municipal Franchises Act, the Oil, 
Gas and Salt Resources Act, the Public Utilities 
Act and the Toronto District Heating 
Corporation Act, 7998. The OEB's processes are 
generally governed by the Statutory Powers 
Procedure Act. The Board has also developed 



Ontario's Energy Demand 1998 

Demand by Type of Energy in Petajoules 




Ontario's Energy Demand 1998 

Demand by Energy Sector in Petajoules 




■ on 






1096.8 


40.1% 


1 1 Natural Gas 






875.2 


32.0% 


J Natural Gas 


Liquids 


29.8 


1.0% 


IB Coal 






139.1 


5.1% 


Other 






114.3 


4.2% 


^ FlRctrinity 






482.2 


17.6% 



Residential 
I I Commercial 



Industrial 
J Transportation 
LJ Petrochemical 
LJ Other 



546.7 
391.9 
815.2 
740.2 

180.3 
82.5 



19.8% 
14.2% 
29.6% 
26.9% 

6.5% 
3.0% 



its own Rules of Practice and Procedure, which 
detail the formal procedures used in the 
Board's operations. 

The OEB Act describes the Board's mandate 
in the natural gas sector, which includes the 
following objectives: 

• facilitating competition in the sale of gas 
to users; 

• maintaining just and reasonable rates for the 
transmission, distribution and storage of gas; 

• facilitating the rational expansion of 
transmission and distribution systems; 

• facilitating the rational development and 
safe operation of gas storage facilities; and 

• facilitating opportunities for energy efficiency, 
consistent with Ontario government policies. 

The OEB Act also sets out the Board's respon- 
sibilities in relation to electricity. Those 
responsibilities include: 

• facilitating competition in the generation 
and sale of electricity, and a smooth 
transition to competition; 

• providing electricity generators, retailers 
and consumers with non-discriminatory 
access to Ontario's transmission and 
distribution facilities; 

• protecting the interests of consumers with 
respect to prices, as well as the reliability 
and quality of electricity service; 

• promoting economic efficiency in the 
generation, transmission and distribution 
of a financially viable electric industry; and 

• facilitating energy efficiency and the 
use of cleaner, more environmentally 
benign energy services, in a manner that 
is consistent with the policies of the 
Government of Ontario. 



NATURAL GAS 

Licensing Natural Gas 
Marketers 

Under the ECA, the Board 
retained its former functions 
in the natural gas area, and 
assumed additional respon- 
sibilities for licensing gas 
marketers and making rules. 
As of March 1, 1999, for 
example, any individual or 
company that sells natural 
gas to residential and small 
commercial consumers in 
Ontario must apply for and 
receive a licence from the OEB. 

As one of the conditions of 
being licensed, each marketer 
must comply with the Gas 
Marketer Code of Conduct. 
During the 1999-2000 fiscal 
year, the Board granted 
licences to a total of 20 natural 
gas marketers. By March 31, 
2000, there were 21 gas mar- 
keters who held licences to 
operate in Ontario. 

Most natural gas marketers 
operate as independent busi- 
nesses, and sell gas directly 
to their customers. Ontario 
consumers have the option 
of contracting for their gas 
with a marketer, or purchasing 
gas from one of the province's 
three regulated gas distributors: 
Enbridge Consumers Gas, 
Union Gas Limited or Natural 
Resource Gas Limited. The 



As one of the 
conditions of 
being licensed, 
each marketer 
must comply 
with the 
Gas Marketer 
Code of Conduct. 



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Ontario's Energy Demand 1998 

Natural Gas Demand by Energy 
Sector in Petajoules 




Residential 
I I Commercial 



315.5 
202.9 

Industrial 339.2 

I I Transportation 1.5 

Petrochemical 16.2 



36.0% 

23.2% 

38.8% 

0.2% 

1.8% 



Ultimately, the 



Board's goal is to 



set natural gas 



rates that are just 



and reasonable. 



three distribution companies 
serve customers of their own 
directly, and also deliver gas 
to customers who purchase 
gas from marketers. 

In addition to its new role in 
licensing natural gas marketers, 
the OEB has the ability to 
make rules or conditions 
of access to transmission, 
distribution and storage. 
The Board continues to have 
responsibility for other areas 
of the gas business. These 
responsibilities include 
approving natural gas rates, 
approving transmission 
pipeline construction, and 
approving the terms and con- 
ditions of municipal franchise 



agreements. The Board is also responsible for 
issuing Certificates of Public Convenience and 
Necessity when necessary, for approving the 
development of gas storage facilities, and for 
approving changes in the ownership of natural 
gas utilities. 



Approving Natural Gas Rates 

Under Ontario law, regulated natural gas utilities 
are required to submit their proposed rates for 
storing, transmitting and distributing gas for 
the Board's review and approval. The OEB is 
responsible for establishing rates for each 
utility, normally after it holds a public hearing. 

In Ontario, natural gas rates cover the 
commodity cost of the gas, which is passed 
through to the customer without a price 
markup, as well as the costs of transporting 
the gas to Ontario, and the distribution and 
operating costs of the gas utility. Where con- 
sumers purchase gas directly from suppliers, 
the OEB regulates the rates that utilities are 
allowed to charge for transporting, storing and 
distributing the gas, and also establishes a 
buy/sell reference price. 

In fulfilling its rate-making responsibility, the 
Board attempts to strike a balance between 
the prices paid by customers and the rate of 
return that utility shareholders are permitted 
to earn on their investment. Ultimately, the 
Board's goal is to set natural gas rates that are 
just and reasonable for both consumers and 
shareholders. 

During the 1999-2000 fiscal year, the Board 
completed rate hearings for both Enbridge 
Consumers Gas and Natural Resource 
Gas Limited. 



Approving the Construction of Natural 
Gas Pipelines 

Any utility that seeks to construct a natural 
gas transmission line in Ontario must first 
obtain the OEB's approval. Gas pipelines 
generally involve the underground installation 
of large-diameter, high-pressure pipes, and 
therefore usually involve substantial capital 
costs and environmental implications. The 
Board's role is to assess whether or not the 
proposed pipeline construction is in the public 
interest, by thoroughly considering several 
factors, including need, safety, economic impact, 
feasibility, community benefits, security of 
supply and environmental impact. 

During fiscal 1999-2000, the Board dealt with 
several applications to expand pipelines that 
would provide natural gas service to new 
areas of the province. These projects included 
proposed new services in theTownship of 
South Bruce, theTown of Minto and the 
Township of Colborne by Union Gas Limited 
in Southwestern Ontario. 

The Board also approved a major reinforcement of 
an existing pipeline on Union Gas Limited's Owen 
Sound line, to serve that system's anticipated 
growth. In Northern Ontario, the Board approved 
pipeline expansion projects for the unorganized 
Township of Aurora in the District of Cochrane, 
and a new service to the Parry Sound area. 

The OEB's Environmental Guidelines, which were 
issued in 1995, describe the Board's 
expectations for the location, construction and 
operation of hydrocarbon pipelines in Ontario. 
The guidelines emphasize planning considera- 
tions in urban areas, and clarify the filing 
requirements for the environmental reports 
that all applicants must submit. During fiscal 
1999-2000, the Board undertook a review of 



the existing guidelines, and 
revised guidelines are expected 
to be issued in the coming 
fiscal year. 

Chaired by an OEB staff 
member, the Ontario Pipeline 
Co-ordination Committee 
(OPCC) represents several 
provincial government 
ministries which jointly 
consider the environmental 
and safety aspects of pipeline 
construction. Regional agen- 
cies also take part in such 
discussions as necessary. In 
conjunction with a pipeline 
approval, the OEB may also 
grant authority to expropriate 
land and authorize the 
pipeline to cross highways, 
utility lines and ditches. 



Approving Municipal Gas 
Franchise Agreements 

Ontario's municipalities have 
the authority to grant to a 
gas utility the right to provide 
natural gas services within 
the municipality, and to use 
road allowances or utility 
easements to build gas-related 
infrastructure. However, the 
specific terms and conditions 
of each franchise agreement 
require the Board's approval. 

Since 1987, a model agreement 
developed by the Board has 
formed the basis for all muni- 
cipal franchise agreements. 
But several factors - including 



The Board's role 
is to assess 
whether or not 
the proposed 
pipeline 
construction 
is in the public 
interest. 



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Natural gas may be 



injected into 



an underground 



geological 



formation only in 



an area that has 



been designated 



for gas storage. 



recent developments in the 
municipal government sector 
- prompted the Board to 
undertake a review of the 
model agreement during 
fiscal 1999-2000. 

In September 1999, the Board 
issued a request to stake- 
holders for comments on the 
model franchise agreement, 
and a special OEB panel 
subsequently heard a number 
of presentations. By March 31, 
2000, the panel's deliberations 
were nearing completion, and 
a final decision on the model 
franchise agreement was 
expected by summer of the 
next fiscal year. 

In the review of the model 
franchise agreement, Board 
staff facilitated discussions 
between the gas utilities and 
municipalities on the terms 
and conditions of a new model 
agreement. The Board also 
renewed or granted interim 
orders for a number of 
municipal franchise agree- 
ments during the year. 



Issuing Certificates of Public Convenience and 
Necessity 

The Board issues Certificates of Public 
Convenience and Necessity for the construction 
of all works that supply natural gas in Ontario. 
However, the OEB only grants a certificate if 
public convenience and necessity support the 
extension of service. 



Approving Natural Gas Storage Facilities 

Natural gas may be injected into an under- 
ground geological formation only in an area 
that has been designated for gas storage by 
the Lieutenant Governor in Council (LGIC).The 
Board is responsible for making recommenda- 
tions to the LGIC on areas that are 
suitable for designation as storage areas. 

If the LGIC approves an area's designation, the 
Board may then authorize its use for gas storage. 
The OEB also plays a role in determining the 
compensation that should be paid to the 
owners of the land under which gas storage 
areas are located, if the parties cannot reach 
a compensation agreement by themselves. 
Applications for drilling permits for gas wells in 
designated gas storage areas are made to the 
Minister of Natural Resources, and referred to 
the OEB for a report. 

In fiscal 1999-2000, the Board reviewed two 
natural gas storage projects. In the first pro- 
ject, Enbridge Consumers Gas applied for the 
designation and development of the Ladysmith 
Pool. In the other, Union Gas Limited applied 
for development of the Century Pools Phase I 
project, which included the development of 
the Bentpath East and Booth Creek projects. 



Approving Ownership Changes in Natural 
Gas Utilities 

In Ontario, natural gas utilities must obtain the 
OEB's permission before selling their system or 
amalgamating with another company. Board 
approval is also required before any person 
can acquire more than 20 per cent of any class 
of a gas utility's shares. Applications for Board 
approval of a change in a utility's ownership 
are generally dealt with in a 
public hearing. 



ELECTRICITY 

Licensing Participants in the Electricity Market 

The OEB is responsible for licensing all 
participants in Ontario's electricity market, 
including generators, transmitters, distributors, 
wholesalers, retailers and the Independent 
Electricity Market Operator (IMO). 



Ontario's Energy Demand 1 998 

Electricity Demand by 
Energy Sector in Petajoules 




BS 


Residential 


154.0 


31.9% 


□ 


Commercial 


163.8 


34.0% 


■ 


Industrial 


163.2 


33.8% 


• u 


Transportation 


1.3 


0.3% 





As part of the conditions of its 
licence, each licence holder 
must agree to adhere to 
certain codes; for example, the 
Affiliate Relationships Code for 
Electricity Distributors and 
Transmitters sets out the 
standards and conditions for 
the interaction between the 
regulated companies and their 
unregulated affiliates. In addi- 
tion, every retail licensee must 
adhere to the requirements of 
the Electricity Retailer Code 
of Conduct. 

During the 1999-2000 fiscal 
year, the Board issued, 
with the Minister's approval, 
transitional licences for 
84 electricity generators, 
263 electricity distributors, 
two electricity transmitters 
and the IMO.The Director 
of Licensing also granted 
licences to seven electricity 
retailers. 



Approving Electricity Rates 

The OEB is responsible for 
approving the rates charged 
for distributing and transmit- 
ting electricity in Ontario. 
Any individual or organization 
wishing to own or operate an 
electricity transmission or 
distribution system must first 
obtain a licence from the 
OEB, and submit proposed 
transmission and distribution 
rates for the Board's review 
and approval. After the Board 



As part of the 
conditions of 
its licence, 
each licence 
holder must 
agree to adhere 
to certain codes. 



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The Board issued 

interim rate 

orders to 

more than 

250 municipal 

electric utilities 

during the year. 



has completed its review of 
the utility's proposal, the OEB 
issues an order setting out the 
rates that have been approved. 

During the 1999-2000 fiscal 
year, the Board completed 
a transmission rate hearing 
for Ontario Hydro Networks 
Company. However, a final 
decision was still pending on 
March 31, 2000. The Board 
also issued interim rate orders 
to more than 250 municipal 
electric utilities during the 
year, and processed a number 
of applications for changes to 
interim rates. 



Approving Acquisitions, 
Mergers, Sales and Leases 

The Board is responsible for 
approving a number of busi- 
ness arrangements within 
Ontario's electricity industry. 
These arrangements include: 

• amalgamations among 
electricity distributors; 

• acquisitions of the shares of 
electricity distribution and 
transmission utilities; 

• disposal of electricity 
distribution and 
transmission assets; 

• acquisition of electricity 
generating facilities by a 
transmitter or distributor; 



• acquisition of an electricity transmitter or 
distributor by an electricity generator; and 

• mergers by electricity transmitters and 
distributors. 

Sales and leases that involve all or part of an 
electricity transmission or distribution system 
also require the Board's approval. 

During 1999-2000, the Board developed and 
issued guidelines that included the filing 
requirements for consideration of Mergers, 
Acquisition, Amalgamations and Divestitures 
(MAADs) applications from companies in the 
electricity sector. After consulting stakeholders, 
the Board issued its final guidelines in January 
2000. A streamlined process for the applications 
was developed and by March 31, 2000, the 
Board had received a total of three applications. 

Ontario's Electricity Sources 

Electricity Sources Used to Generate 
Electricity Consumed in Ontario in 1998 




7 

Water Power 

Alternative 
Nuclear Energy 
J Natural Gas 
Coal or Oil 



24% 
2% 

39% 
5% 

30% 



Supervising the Independent Electricity Market 
Operator (IMO) 

The Board has regulatory jurisdiction over the 
IMO, and is responsible for approving both its 
budget and fees. The Board also has a role as 
an appellant body in disputes about the rules 
of the electricity market. During the 1999-2000 
fiscal year, the Board began a process to 
review the IMO's budget and set its fees for 
the year 2000. 



Monitoring the Electricity Market 

The Board is responsible for monitoring 
Ontario's electricity market, and for reporting 
on its fairness, efficiency, transparency and 
competitiveness to the Minister of Energy, 
Science and Technology. 

The Board is also responsible for reviewing 
Ontario Power Generation Inc.'s progress 
towards achieving the milestones outlined 
in its Market Power Mitigation Agreement with 
the government. The Board's monitoring activ- 
ities involve watching for potential or actual 
abuses of market power, and ensuring that all 
participants in the electricity market comply 
with the terms and conditions of their 
licences, including any associated codes 
and rules. 



During the year, the Board's 
staff continued consultations 
with the IMO and the Federal 
Competition Bureau on 
developing guidelines for 
the respective roles and 
processes for reviewing 
market surveillance issues. 

In addition, the Board's staff 
started work on developing 
economic and environmental 
guidelines for electricity 
distribution and transmission 
system expansion. 



The Board's 
monitoring activities 
involve watching 
for potential 
or actual abuses 
of market power. 



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Organizational Overview of the Board 



The Board's 

staff represent a 

highly-skilled, 

multi-disciplinary 

team that includes 

economists, financial 

analysts, accountants, 

lawyers, administrators, 

policy development 

experts and 

communications 

specialists. 



During 1999-2000, the Board 
had 12 members, including 
the Chair and Vice-Chair. There 
are six full-time members, 
and six part-time members. 
The Board's members are a 
multi-disciplinary group, with 
expertise in several key areas, 
including law, engineering, 
accounting, economics 
and energy. 

Board members are appointed 
by the Lieutenant Governor in 
Council for terms of between 
one and three years. At most 
major hearings, Board mem- 
bers sit in panels of three. 
However, the OEB Act pro- 
vides that only two Board 
members are needed to make 
up a quorum, and in special 
circumstances, the Chair or 
Vice-Chair may authorize a 
single Board member to hear 
and determine a matter. 

During fiscal 1999-2000, 
the OEB had a total staff 
complement of 78 positions. 
Like the Board's members, 
the Board's staff represent a 
highly-skilled, multi-disciplinary 
team that includes economists, 
financial analysts, accountants, 
lawyers, administrators, policy 
development experts and 
communications specialists. 



In January 2000, the Board created a new 
position - the General Manager. The General 
Manager acts as the OEB's chief operating officer, 
leading and managing all aspects of the Board's 
operations. The General Manager is also 
responsible for ensuring the timely completion 
of all activities related to the opening of the 
electricity market, including the development 
of licences, codes, guidelines and handbooks. 

The Licensing and Applications Branch is 
responsible for advising the Board on, and 
processing applications from, utilities for 
licences and rates, and for facilities approvals. 
The branch also develops licences and codes for 
participants in the energy market. 

The Director of Licensing has specific legislative 
responsibilities to issue licences to natural 
gas marketers and all participants in the provincial 
electricity market. The Director's decisions 
can be appealed to the Board. The Licensing 
and Applications Branch is made up of three 
sections: Energy Licensing, Rates/Financial 
Services and Facilities. 

The Energy Licensing section advises the Director 
of Licensing and the Board on licence applications 
and the administration of the licensing process. 
The section also provides advice to the Board 
on the development and administration of code 
and rule requirements for participants in the 
energy market. 



The Rates/Financial Services section advises 
the Board on gas and electricity rate applica- 
tions and other finance-related applications. 
The section is also responsible for providing 
advice on the implementation of codes and 
rules, as well as the Board's Rate Handbook 
for electricity distributors. 

The Facilities section advises the Board on 
gas and electricity facility applications, as well 
as gas franchise applications. The section also 
provides policy development assistance 
relating to the expansion of Ontario's gas and 
electricity systems, including pipelines, gas 
storage facilities, and electricity distribution 
and transmission lines. 

The Regulatory Affairs Branch provides a wide 
range of professional, technical and advisory 
services to the Board. The branch has four sec- 
tions: Strategic Services, Audit/Compliance/ 
Energy Returns Officer, Market Surveillance 
and Appeals. 

The Strategic Services section develops 
regulatory policy options, conducts research on 
current and emerging issues, and undertakes 
strategic regulatory planning. The section's staff 
maintain contact with the utilities, stakeholder 
groups and other regulatory and energy bod- 
ies in Canada and the United States. 

The Audit/Compliance/Energy Returns Officer 
section conducts audits and performs compliance 
monitoring activities to ensure that regulated 
gas and electricity monopoly utilities comply 
with Board decisions, orders, and other regulatory 
instruments. The section also monitors various 
aspects of the gas and electric utilities' financial 
operating performance. Section staff also 
provide the Board with accounting, financial 
and technical advice. 



The Market Surveillance 
section assists the Board in 
monitoring Ontario's energy 
markets and detecting potential 
or actual abuses of market 
power, in part by reviewing 
IMO reports on market power 
and market abuse. The sec- 
tion advises the Board on 
market operation and market 
mitigation measures, and 
makes recommendations on 
Board decisions that affect 
market rules. 

The Appeals section co- 
ordinates the processing of 
appeals and other matters 
that are referred to the Board 
in relation to licensing and 
market rules. The section also 
assists the Board in dealing 
with applications and reviews 
before the courts on a wide 
variety of topics - including 
rates and jurisdictional issues. 

The Corporate Services 
Branch provides a wide range 
of support services to the 
Board, and is made up of four 
sections: Business Services 
and Planning, Information 
Technology and Operations, 
Legal Services and the Board 
Secretary's Office. 

The Business Services and 
Planning section provides 
financial, human resources, 
administration and planning 
co-ordination services. 



The Market 
Surveillance section 
assists the Board 
in monitoring 
Ontario's energy 
markets and detecting 
potential or 
actual abuses 
of market power. 



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The Legal Services 

section provides 

legal advice to 

the Board's 

members and 

staff on all 

aspects of 

the OEB's 



The Information Technology 
and Operations section 
manages and delivers office 
automation and technology- 
related services, including 
security, telecommunications 
support and the development 
and maintenance of computer 
systems. 

The Legal Services section 
provides legal advice to the 
Board's members and staff 
on all aspects of the OEB's 
responsibilities - including 
hearings, acquisitions and 
amalgamations, licensing, 
rule-making and cost assess- 
ment. Legal Services also 
provides advice on appeals 
and judicial reviews, and 
interpretive services on 
issues relating to legislation, 
contracts and conflict of 
interest. In addition, the 
section represents the Board 
and the Director of Licensing 
as counsel during hearings. 



The Board Secretary's Office performs all of the 
OEB's registrar and communications functions. 
Those functions include making the logistical 
arrangements for public hearings, maintaining 
the public record of hearings and issuing the 
Board's regulatory documents. The group also 
provides case administration services to assist 
hearing panels and the Board's regulatory staff. 

The Board Secretary's Office also provides a 
variety of communications functions, and has 
operational responsibility for the Board's Web 
site, media relations, the Customer Service 
Centre, the Information Resource Centre and 
the Public File Room. 



responsibilities. 




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THE YEAR IN REVIEW: OPERATIONAL HIGHLIGHTS 
OF FISCAL 1 999-2000 



The OEB was given 

significant new 

responsibilities 

as the provincial 

regulator of the 

monopoly parts 

of the electricity 

industry. 



Preparing for the New Energy 
Environment 

Ontario's Energy Competition 
Act, 1998 (the ECA), received 
the approval of the Legislative 
Assembly in November 1998. 
The legislation introduced 
major changes to Ontario's 
energy industry, and continued 
the process of natural gas 
deregulation, which began 
in 1985. Perhaps most impor- 
tantly, the ECA provided for 
the creation of a deregulated 
electricity supply market - and 
set out the province's ultimate 
goal of an open, competitive 
market in both electricity and 
natural gas. 

The ECA - which contains 
both the Ontario Energy 
Board Act, 1998 (the OEB Act) 
and the Electricity Act, 1998- 
significantly redefined the 
Ontario Energy Board's roles, 
responsibilities and mandate. 
While most of the Board's 
previous responsibilities as a 
regulator of Ontario's natural 
gas industry were retained in 
the legislation, the OEB was 
given significant new respon- 
sibilities as the provincial 
regulator of the monopoly 
parts of the electricity industry. 
In addition to giving the OEB 
regulatory oversight of Ontario 



Hydro's successor companies, the expanded 
legislative mandate includes regulatory 
responsibility for licensing and rate-setting, 
as well as monitoring Ontario's more than 
250 municipal electrical utilities. 



New OEB Committee Structure 

To prepare for its new, expanded role, the 
Board launched a major strategic planning 
initiative during the 1999-2000 fiscal year. 
Four technical working committees were 
created, each comprised of Board members and 
staff. The working committees were created to 
deal with the responsibility areas of facilities, 
rates and licensing, as well as the area of 
mergers, acquisitions, amalgamations and 
divestment. Each working committee is 
responsible for bringing forward recommen- 
dations on policy and processes in its area for 
the full Board's consideration. 

The Board members on the four working 
committees also form a standing panel that 
can make decisions on applications that do 
not require a hearing, or applications that 
have been processed in a written hearing. The 
standing panel can refer any matter to the full 
Board, or recommend that a full oral public 
hearing be held. 



Pursuing Operational Efficiency 

The Board continues to work closely with 
Ontario's energy industry to pursue more 
efficient and cost-effective approaches to 
achieving its goals. Such approaches include 
the use of written hearings wherever possible, 
extensive consultation and the efficient 
application of information technology. 

Adopting innovative approaches to regulation - 
including Performance Based Regulation (PBR) 
- represents an important part of the Board's 
expanded mandate under the Energy Compe- 
tition Act. This responsibility recognizes that a 
competitive energy market demands a more 
responsive and flexible regulatory framework, 
and incentives for participants to reduce costs 
and respond efficiently to market forces. 

The Board is also responsible for regulating 
the activities of more than 250 municipal 
electrical utilities in Ontario. This is a highly 
diverse group of organizations, whose customer 
bases range from as few as 200 people to 
more than two million. 

In response to the diverse nature of Ontario's 
municipal electrical utilities, the Board examined 
and endorsed the concept of PBR, which is 
designed to allow for greater flexibility in 
pricing and offer more substantial rewards for 
performance, without sacrificing either customer 
satisfaction, service or reliability. 

The Board's consultative efforts on the PBR 
initiative during 1999-2000 resulted in a number 
of task force reports, which were used by the 
Board's staff to prepare a draft Rate Handbook. 
Regional seminars on the draft handbook were 
held, and the Board held a proceeding in the 
fail of 1999. 



In January 2000, the Board 
issued its Decision with 
Reasons. The Electricity 
Distribution Rate Handbook, 
including a Rate Unbundling 
Design Model, was finalized 
in March 2000. Board staff 
then conducted several 
information and education 
sessions on the Rate Handbook 
for utility staff across Ontario. 

After consultation with the 
province's electricity distribu- 
tion utilities during the year, 
the Board released the 
Accounting Procedures 
Handbook, which includes 
the Uniform System of 
Accounts (USoA). Board staff 
subsequently held several 
information and education 
sessions on the handbook 
across the province. 

Other projects initiated 
during the year included 
the development of a rate 
unbundling and design model 
for use by the municipal 
electric utilities in preparing 
their rate applications, and the 
development of processes, 
criteria and filing requirements 
for audit reviews, investiga- 
tions, compliance monitoring 
and appeals. 



A competitive energy 



market demands a 



more responsive and 



flexible regulatory 



framework, and 



incentives for 



participants to reduce 



costs and respond 



efficiently to 



market forces. 



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The OEB opened 



its new Customer 



Service Centre, 



which was created 



to help the Board 



carry out its expanded 



consumer protection 



and education mandate 



in electricity and 



natural gas. 



Task Forces Prove Effective 

In the interest of adopting 
the most efficient and cost- 
effective approaches to 
regulation, the Board worked 
closely during the 1999-2000 
fiscal year with many repre- 
sentatives of the provincial 
energy industry. The industry's 
involvement and experience 
served as valuable resources 
for the Board, while promoting 
a co-operative, consultative 
decision-making process in the 
development of Ontario's new 
regulatory framework. 

During the year, the Board set 
up a number of task forces 
with representation from a wide 
range of industry stakeholders. 
The task forces helped the 
Board to examine its options 
in the development of new 
regulations for licensing and 
rate-setting in the electricity 
sector. 

As well, the members of the 
various task forces made a 
significant contribution to 
developing the Standard 
Supply Service (SSS) Code, 
the Retail Settlement Code 
(RSC), the Distribution 
System Code (DSC), the 
Transmission System Code 
(TSC), the Rate Handbook, 
and the Accounting Procedures 
Handbook (APH). 

Task force recommendations 
formed the basis for the draft 



Transmission System Code and the draft 
Distribution System Code, both of which 
were expected to be finalized early in the 
coming fiscal year. A task force to develop 
recommendations for the Gas Distributors 
Access Rule was created in January 2000, 
and its final recommendations are also 
expected early in 2000-2001. 



Communications and Customer Service 

Effective communications and high-quality 
customer service from the OEB are vital as 
Ontario's electricity market moves toward the 
opening of competition. The Board recognizes 
the need for open, timely communications to 
energy consumers who need to understand 
the implications of energy restructuring, and 
to the regulated participants of the energy 
market, who need information on how to 
prepare for the opening of the competitive 
electricity market. 

The Board's staff and representatives from 
various energy stakeholders participate in the 
regular meetings of the Ministry of Energy, 
Science and Technology's Consumer Education 
Sub-committee. The sub-committee is responsible 
for developing and implementing a consumer 
education program that provides information 
on the deregulation of the electricity industry, 
and the options that are available to consumers 
in Ontario's new energy marketplace. 

On March 20, 2000, the OEB opened its new 
Customer Service Centre, which was created to 
help the Board carry out its expanded con- 
sumer protection and education mandate in 
electricity and natural gas. The centre is staffed 
with a co-ordinator and four customer service 
representatives, who provide energy-related 
information in both official languages to the 
general public. 



The Customer Service Centre offers several 
fact sheets on the province's natural gas 
and electricity industries. It also deals with 
complaints and disputes between consumers 
and natural gas marketers or electricity retail- 
ers. The centre can be reached by phone 
Monday to Friday, between 8:30 a.m. and 5:00 
p.m., by calling 1-877-632-2727 (toll-free) or, in 
theToronto area, by calling (416) 314-2455. 

During 1999-2000, the Board continued to 
expand its Web site, which provides on-line 
access to news releases, speeches, applications, 
Board decisions and orders, statutory notices, 
transcripts and other regulatory documents 
and publications. The site's importance was 
demonstrated during the year by the high volume 
of visitors it received, and this prompted the 
Board to undertake a redesign of the site in 
early 2000. 

The redesigned site - which is expected to be 
launched early in the coming fiscal year - will 
provide visitors with faster, more user-friendly 
access, and more efficient ways to retrieve 
information. 



Electronic Regulatory Filing 

Significant progress was also made during 
1999-2000 on the Board's Electronic Regulatory 
Filing (ERF) initiative. After several years of study 
and preparation, major development contracts 
were signed to begin the construction of a 
system that will allow regulatory documents 
to be filed with the Board electronically as its 
Official Record. The new system, which will use 
standard data and security techniques to meet 
archival and evidentiary requirements, is 
expected to be operational in late 2000. 

The Board began a variety of other systems 
projects during the last fiscal year. These projects 



included internal process 
support systems - such as 
Inquiry Tracking and Case 
Management , enhanced 
public information access 
systems, and systems to 
support regulatory processes. 



Outreach Activities 

Each year, one of the important 
ways the Board provides 
information to stakeholders 
is by taking advantage of as 
many speaking opportunities 
as possible. During the 1999- 
2000 fiscal year, the OEB's 
Chair, members and staff took 
part in a number of public 
forums - including the annual 
conference of the Municipal 
Electric Association, the 
Independent Power Producers' 
Society of Ontario, the 
Association of Major Power 
Consumers in Ontario, the 
Ontario Natural Gas Association 
and other conferences 
organized by the Institute for 
International Research, and 
the Canadian Association of 
Members of Public Utility 
Tribunals (CAMPUT). 

The Board's members and staff 
also participated actively in a 
number of professional orga- 
nizations, including CAMPUT, 
the National Association of 
Regulatory Utility Commissioners 
(NARUC), the International 
Association of Business 
Communicators, the Canadian 
Association of Certified 



The Web site's 
importance was 
demonstrated 
during the year by 
the high volume 
of visitors 
it received. 



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The Board has 

the discretion 

to find that an 

intervenor is 

eligible for a 

cost award 

in a particular 

proceeding. 



Management Consultants, the 
Canadian Institute of Chartered 
Accountants, and the Council of 
Canadian Administrative 
Tribunals. 

During the year, the Board 
held some 30 workshops 
across the province to provide 
information and educate its 
stakeholder community.The 
workshop topics included 
licensing, codes, Performance 
Based Regulation (PBR) and 
the Accounting Procedures 
Handbook. 



Intervenors and Cost Awards 

The OEB's activities can affect 
a wide variety of public and 
special interest groups, which 
means that the Board's 
proceedings often attract a 
wide range of intervenors. 
During 1999-2000, consumer 
groups, industrial associations, 
environmental groups, public 
institutions and landowners 



were among the dozens of the parties that 
took part in OEB proceedings. 

Like some other tribunals, the OEB has authority 
to award costs at the end of a proceeding. 
Under the Board's Cost Eligibility Guideline, 
intervenors in an OEB proceeding are eligible 
for a cost award if they primarily represent: 

• the direct interests of consumers in relation 
to regulated services; 

• a public interest that is relevant to the 
Board's mandate; or 

• a significant grouping of interests that are 
relevant to the Board's mandate. 

The Board also has the discretion to find that 
an intervenor is eligible for a cost award in 
a particular proceeding. During 1999-2000, 
the Board was in the process of reviewing 
the criteria used to determine eligibility for 
cost awards, as well as the amount of the 
awards. New guidelines and tariffs are expected 
to be issued early in the coming fiscal year. 

The intervenor costs awarded by the Board 
during fiscal 1999-2000 are summarized in the 
following table. 



Intervenor Cost Awards 1999-2000 



Case Type 



Gas Rates 
Facilities 



Number of 
Proceedings 
6 

1 



Number of 
Cost Orders 

55 
1 



Amount Awarded 

($) 

2,202,473.65 
33,573.71 



Totals 7 56 2,236,047.36 

Refers to fiscal year in which cost award was issued. Hearings occurring in one fiscal year may not 
have cost awards issued until a subsequent fiscal year. 



FINANCIAL REPORT FOR 

APRIL 1 , 1 999 TO MARCH 3 1 , 2000 



The Ontario Energy Board is classified as a 
Regulatory Agency, and is funded out of the 
government's Consolidated Revenue Fund. The 
Board is subject to all the financial and admin- 
istrative policies established by the 
Government of Ontario, through the Management 
Board of Cabinet and the Minister of Finance. 
The Board is a full cost recovery agency. All 
monies collected on behalf of the Board are 
paid into the Consolidated Revenue Fund. 

The Board submits its annual budget to the 
Ministry of Energy, Science and Technology for 
incorporation into the ministry's estimates, 
which are presented to the Management Board 
and subsequently to the provincial legislature 
for approval. A table summarizing the Board's 
financial data for the fiscal year 
1999-2000 is shown below. 



Recovering Board Costs 

The Board has been a 100 percent 
cost recovery agency since 
April 1, 1992. In the past, the 
Board fully recovered its costs 
by assessing them against 
applicants - usually the natural 
gas utilities and Ontario Hydro - 
that were involved in Board 
hearings and related activities. 
After each hearing, the Board 
simply invoiced the applicant 
concerned. The amount of the 
invoice included the Board's 
direct expenses for the hearing, 
as well as a contribution towards 
the Board's fixed costs, such as 
general overheads and payroll. 



OEB Spending Analysis 1999-2000 



Standard Account 



Printed Estimates (1) 



Actual Expenditures 



Salaries and Wages 4,820,100 

Employee Benefits 835,100 

Transportation and Communication 369,100 

Services 5,896,100 

Supplies & Equipment 799,500 



Total 

(1 ) Approved budget as of April 1 , 1999 



12,719,900 



3,852,327 
698,640 
340,758 

7,214,661 
471,192 



12,577,578 



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The Act empowers 

the Board to 

make an annual 

assessment of all 

the fixed costs 

and expenses it 

incurs in carrying 

out its duties. 



However, a significant change 
to the Board's traditional cost 
assessment procedures was 
required during the 1999-2000 
fiscal year. The change was 
needed to recognize the Board's 
expanded responsibilities under 
the Ontario Energy Board Act, 
and to recognize the approval 
by the LGIC on November 17, 

1999 of a regulation made 
under the ECA that deals 
specifically with the assess- 
ments of Board expenses and 
expenditures in the years 1999, 

2000 and 2001. 

The OEB Act now provides for 
recovery of the Board's costs 
in three ways. First, the Act 
gives the Board the authority 
to set and charge fees, such 
as licence fees, application 
fees and other fees. Second, 
the Act empowers the Board to 
make an annual assessment of 
all the fixed 



costs and expenses it incurs in carrying out its 
duties. Third, it gives the Board the ability to 
recover out-of-pocket or variable costs that are 
incurred directly by the Board and associated 
with the conduct of its proceedings. 

In these ways, the Board is able to recover the 
full cost of its operations every year from the 
natural gas and electricity industries it regulates. 

Currently, most of the Board's operating costs 
are to be recovered through an annual cost 
assessment process, and the regulation 
mentioned in the previous paragraph establishes 
the formula to be used in determining such 
expenditures. Among other things, the regulation 
identifies the various classes of persons who 
are liable to pay the assessment, prescribes 
the manner in which the assessment is to be 
made, and provides for a "true-up" mechanism. 

The Board implemented its initial cost assess- 
ment in mid-December of 1999, by issuing more 
than 250 invoices totaling $11.8 million to a 
wide variety of natural gas and electricity 
utilities throughout Ontario. 



OEB Cost Recovery Analysis 1999-2000 



Account 



Actual Non-tax Revenue 



Cost Assessment 
Hearing Costs 
Application Filing Fees 
Miscellaneous 
PriorYear Recoveries 



11,769,120 


(1) 


74,206 


(1) 


20,725 

2,118 

975,370 


(1) 
(1) 
(2) 


12,841,539 


(3) 



TOTAL: 



(1) As reported on the cash method 

(2) Prepayment of Electronic Regulatory Filing Costs for fiscal 1998-1999 

(3) As compared to budgeted amount of $12,719,900 as of April 1, 1999 



BOARD DECISIONS 
AND ORDERS 

During the 1999-2000 fiscal year, the Board 
issued seven written decisions and 495 orders, 
which are summarized in the table below. 



Ontario Energy Board Regulatory Activities 
Fiscal 1999-2000 



Application Type 



Decisions Issued 



Orders Issued 



Franchise 

Certificates 

Facilities 

Rates 

Other Matters 



2 
2 
3 



72 
12 
11 
18 

7 



Licences Issued 

Distribution 
Transmission 
Gas Marketer 
Generation 
Electricity Retailer 



375 

263 

2 

19 

84 

7 



Activity Totals 



495 



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KEY BOARD CONTACTS 



Chair Floyd Laughren 

Vice-Chair George Dominy 

Board Solicitor Steve McCann 

General Manager Jay Young 

Director of Corporate Services Bob Cappadocia 

Board Secretary Paul Pudge 

Manager, Business Services and Planning Ansar Ahmed 

Team Leader, IT and Operations Charles Mathis 

Director of Licensing Anne Powell 

Manager, Energy Licensing Brian Hewson 

Manager, Facilities Neil McKay 

Manager, Rates/Financial Services Mark Garner 

Director of Regulatory Affairs Betsy Mills 

Team Leader, Audit/Investigations Randy Pugh 

Team Leader, Strategic Services Mike McLeod 

Board personnel can be reached by contacting the Board's receptionist at 
1-888-632-6273 (Toll Free) or (416) 481-1967.